Powerball is jackpotting at a historic $150 million on Thursday and AMP has come up with the top five money moves you should make if you have the winning ticket.
AMP financial adviser Andrew Heaven said:
“Most of us dare to dream big and allow ourselves to think about what we would do if we were to win Powerball’s $150 million jackpot.
“Thoughts tend to jump to first class flights, Ferraris and French champagne rather than the practical steps you should take to ensure you don’t win and then lose the lot.
“Winning the lottery can change your life in a single moment but unfortunately it doesn’t mean the end of life’s financial challenges. A sudden windfall brings with it a whole host of financial implications you may not have thought about.
“Managing a large lump sum of money can be a daunting task. It pays to take a strategic, long-term and sustainable view of how to spend and invest it so that you can live the life you want and make the money last as long as possible, if not forever.”
Here are AMP’s top five money moves that you should make should the impossible happen and you win the jackpot.
- Don’t spend anything – at least initially. It may be tempting to go on a wild spending spree with your newfound wealth – starting Friday – but remember it’s easier to lose $150 million than it is to win it. Treat yourself to something small but avoid the temptation to put a dent in your winnings until you’ve come to terms with your new bank balance and worked out what to do with it.
- Line up an ‘A’ team. What you can do immediately is seek professional advice and secure a team of experts around you. You’ll need help finding the best way to manage and even grow all those dollars to secure your long-term financial future. For example, while the actual winnings are tax free, you will be taxed on any income you earn from that money. At the very least, your ‘A’ team should include a financial adviser, a lawyer and a tax accountant. Seek the best advice out there because you’ll need it. Now isn’t a time to rely on the advice of family and friends.
- Set some goals. Think about what you want to achieve with your wealth and set some goals accordingly. Do you want to give a large chunk of your winnings to charity? Is helping your friends and family important to you? Or do you just want to live the high life for as long as possible? Once you determine what’s important to you, your advisers can help formulate a financial plan that will help protect and grow your money so that you can achieve your goals now and in the future. Setting goals will also help you manage the requests for financial assistance that you will start to receive once word gets out about your winnings. Top five money moves you should make if you win Powerball’s $150 million jackpot.
- Pay off bad debts. The exception to the immediate ‘no spend’ rule is when it comes to debt reduction. There is no better investment than paying off bad debts. Most of us have debt whether it is HECS, credit card or mortgage debt. Consider wiping the slate clean on these debts once your winnings hit your bank account as when you’ve paid down a dollar of debt, that’s a dollar you no longer owe.
- Establish a budget and live within it. While $150 million is a lot of money, you will still need a budget of sorts to ensure you don’t end up with nothing. There are plenty of cautionary tales among previous lottery winners who spent beyond their considerable means and who ended up with less money than what they had when they hit the jackpot. Establish a budget that takes into account the amount of money you have and any income you’ll get from investments you make. This will help ensure your lifestyle is sustainable for the future.
Should you even play?
It’s important to note that Australians have a better chance of being struck by lightning or dying from a snake bite than winning the lottery so consider whether your long shot at becoming a multimillionaire is worth the money you’ll pay for the ticket.
Mr Heaven said: “According to the Australian Gambling Research Centre and the Australian Government's Institute of Family Studies, regular lottery participants spend an average of $695 annually on tickets. You should consider whether there are other, more realistic ways you could use this money to try to get rich. Putting these funds into a savings account, your superannuation account or investing it will almost certainly have a more positive outcome on your finances than taking a chance on the miniscule odds of winning the lottery. But, if you decide to go for the big one, good luck!”